As the economy continues to contract, how is Cisco (NASDAQ:CSCO) expanding its resources without expanding its employee roster? By going back to school.

Cisco today plans to announce a formal partnership with the University of California at Santa Cruz (UCSC) for the established of a Network Management and Operations Lab (NMO Lab). While Cisco has many educational partnerships around the globe, the work with UCSC is different: As opposed to just network education, the NMO Lab effort will be focused on network engineering research into how to better meet the needs of Cisco's enterprise customers, today and tomorrow.

"We get real problems from customers or even from Cisco for students to work on," Ved Sharma, director of technical services at Cisco, told InternetNews.com.

Sharma noted that most of Cisco's other educational engagements are purely networking academies where the curriculum is based on learning about networking technologies. For example, Sharma said UCSC had earlier already helped out Cisco is in the development of new real time quality of service testing tool.

With the help of research from UCSC, Cisco now has a tool that can perform quality-of-service testing for a network in near-real time, as opposed to just a statistical sampling.

Professor Patrick Mantey of UCSC noted that he expects the partnership will help drive interesting master thesis and graduate student work in areas associated with managing and monitoring large complex networking systems

One such interesting master's thesis being completed at UCSC now has to do with the problem of dealing with data from a large number of source points for test data. Mantey noted that a typical use case today would involve an enterprise duplicating the data into one master report in order to analyze. The master thesis work is looking at consolidating the data from a networking point of view using virtualization.

"The idea of doing the data extraction virtually and being able to pull out data as needed instead of just reloading into a new image of data is a very interesting challenge," Mantey said.

UCSC is also looking at network access control (NAC) scenarios for research as well as actual university deployment. Brad Smith, Assistant Adjunct Professor of Computer Engineering, UCSC explained that from a research point of view he's looking at new ways of allocating resources with NAC. Cisco is an active vendor in the NAC space so the work done at UCSC could end up benefiting Cisco customers as well.

"On campus we have deployed real active technology to force machines to have certain patch levels," Smith told InternetNews.com. "Taking it to the next level is based on who you are and time of day you get access to different portions of the network. You essentially distribute firewall functionality throughout the network."

Networking education is also part of Cisco's engagement with UCSC, but Smith noted in network engineering the research component can mature very quickly.

"The difference between research and the real applied dimension of technology is very short," Smith said. "So once a student has had a few courses with lab we can cut them loose and they can work on real world problems. They can contribute directly and immediately and it brings the subject alive. "

Both Mantey and Smith noted that enrollment in Computer Science education at their university is growing with networking course enrollment at an all-time high.

"It's a hot area -- the knowledge economy runs on the network," Mantey said.

While Cisco did not disclose specifically how much money it is investing with UCSC for the NMO Lab work, the effort provides hands on experience and even possible job opportunities.

"Regardless of current business outlook, we continue to seek high-talented students," Sharma said.